The textile industry has demanded of the government to restore the upper capping on gas wellhead rates in order to neutralise the impact of international surge in oil pries, sources told Business Recorder here on Friday.
The former government had removed the capping that was used in computation and determination of gas wellhead prices, linked to international oil prices. This step has caused an imbalance and resulted in higher tariff of gas supplied to the consumers.
"Matching gas tariffs of fertiliser industry should also be granted to the textile sector on Exports Realisations at Rs 36.77 per MMBTU instead of R 251.55 MMBTU", sources said.
"After the arrival of foreign gas explorers in 2007, the former government at once decided to remove the upper cap that has increased the gas prices for the textile industry", they said. "The gas tariff on the industrial sector carries the burden of subsidy provided to the domestic consumers as well as to the fertiliser industries", the claimed.
"The subsidy provided to domestic consumers of gas as well as to feed stock should be given through federal budgetary allocation to relieve the industry and thereby bring down the cost of production", they added. They said that the government should introduce the zero-rated sales tax regime on the textile industry to eliminate refunds and to provide impetus to the unregistered units to opt for registration to avail zero-rated inputs.
They said the high cost of production is making the export products uncompetitive in the global market. Even in the domestic market, 60-70 percent costumers do want to buy the imported garments just because of their less prices as compared to the locally manufactured garments.
They said that the government is not in the favour of R&D but it should be continued for another five years with increment in the number of countries. "If R&D is extended to all the 74 textile importing countries, the additional cost on the exchequer is estimated to Rs 182 million while the estimated increase in budget is Rs 111.1 million if this subsidy is extended to those countries where exports have increased during 2007-08", they stated.
They said that 3 percent R&D is provided on fabric export to 74 countries, which means that fabric is supplied on subsidised rate to apparel producing countries, whilst the local apparel manufacturer acquires the same at 3 percent higher prices.